BENGALURU: The Karnataka High Court has dismissed a petition by Union Bank of India that sought to transfer the investigation into an alleged fraud involving the Karnataka Maharshi Valmiki Scheduled Tribes Development Corporation Ltd (KMVSTDC) to the Central Bureau of Investigation (CBI). The court, presided by Justice M. Nagaprasanna, ruled that Section 35A of the Banking Regulation Act does not provide sufficient grounds for transferring the case to the CBI, as this would set a precedent that any bank could request such transfers, potentially undermining state investigative agencies.
Union Bank had argued that the seriousness of the allegations, which involve fraudulent transactions totaling over Rs 94 crore, warranted intervention by the CBI. However, the Karnataka government countered this argument, maintaining that state police are equipped to handle the case within their jurisdiction. Senior advocate B.V. Acharya, representing the state, emphasized that state police powers are protected under the law and cannot be overridden by central agencies without clear justification.
The case, commonly referred to as the “Valmiki Case,” emerged after a KMVSTDC superintendent, Chandrasekaran, took his own life, leaving a note accusing multiple officials of large-scale corruption within the corporation. His note named three officials and suggested that crores had been siphoned through fraudulent board resolutions. Following these revelations, B. Nagendra, the Scheduled Tribes Welfare Minister, resigned and was detained by the Enforcement Directorate.
In May, KMVSTDC Managing Director A. Rajashekar filed a formal complaint, alleging that over Rs 94 crore had been illegally withdrawn from the corporation’s Union Bank account using forged signatures. This complex case involves allegations of misuse of funds intended for Scheduled Tribes’ welfare, casting a spotlight on financial governance within the corporation and the limitations of jurisdictional boundaries in addressing such financial crimes.
